Quarterly Report pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 | ||||||||
For the quarterly period ended | ||||||||
Transition Report pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 | ||||||||
For the transition period from to |
(State or Other Jurisdiction of Incorporation or Organization) | (I.R.S. Employer Identification No.) | ||||||||||
Title of each class | Trading Symbol(s) | Name of each exchange on which registered | ||||||
$0.01 par value per share |
☒ | Accelerated filer | ☐ | |||||||||
Non-accelerated filer | ☐ | Smaller reporting company | |||||||||
Emerging growth company |
Class | Number of Shares | |||||||
Class A Common Stock, par value $0.01 per share |
Page | ||||||||
PART I. | ||||||||
Item 1. | ||||||||
Item 2. | ||||||||
Item 3. | ||||||||
Item 4. | ||||||||
PART II. | ||||||||
Item 1. | ||||||||
Item 1A. | ||||||||
Item 2. | ||||||||
Item 5. | ||||||||
Item 6. | ||||||||
Defined Term | Definition | ||||
10b5-1 Plan | Trading plan adopted pursuant to Rule 10b5-1 of the Exchange Act | ||||
Adjusted Diluted EPS | Adjusted diluted earnings per share | ||||
ASC | Accounting Standards Codification | ||||
ASR | Accelerated Stock Repurchase | ||||
CC | Constant Currency | ||||
CE | Continental Europe | ||||
CITA | Commissioner of Income Tax (Appeals) in India | ||||
CMT | Communications, Media and Technology | ||||
Credit Agreement | Credit agreement with a commercial bank syndicate dated October 6, 2022 | ||||
CTS India | Our principal operating subsidiary in India | ||||
DOJ | United States Department of Justice | ||||
DSO | Days Sales Outstanding | ||||
DTSA | Defend Trade Secrets Act | ||||
EPS | Earnings per share | ||||
EU | European Union | ||||
Exchange Act | Securities Exchange Act of 1934, as amended | ||||
FS | Financial Services | ||||
GAAP | Generally Accepted Accounting Principles in the United States of America | ||||
HS | Health Sciences | ||||
High Court | Madras, India High Court | ||||
India Defined Contribution Obligation | Certain statutory defined contribution obligations of employees and employers in India | ||||
IoT | Internet of Things | ||||
IRS | Internal Revenue Service | ||||
ITD | Indian Income Tax Department | ||||
Mobica | MOBICA HOLDINGS LIMITED | ||||
NA | North America | ||||
P&R | Products & Resources | ||||
RoW | Rest of World | ||||
SCI | Supreme Court of India | ||||
SEC | United States Securities and Exchange Commission | ||||
Second Circuit | United States Court of Appeals for the Second Circuit | ||||
SG&A | Selling, general and administrative | ||||
Syntel | Syntel Sterling Best Shores Mauritius Ltd. | ||||
Tax Reform Act | Tax Cuts and Jobs Act | ||||
Term Loan | Unsecured term loan under the Credit Agreement | ||||
TriZetto | The TriZetto Group, Inc., now known as Cognizant Technology Software Group, Inc. | ||||
UK | United Kingdom | ||||
USDC-NJ | United States District Court for the District of New Jersey | ||||
USDC-SDNY | United States District Court for the Southern District of New York |
Cognizant Technology Solutions | 1 | June 30, 2023 Form 10-Q |
Forward Looking Statements |
Cognizant Technology Solutions | 2 | June 30, 2023 Form 10-Q |
Cognizant Technology Solutions | 3 | June 30, 2023 Form 10-Q |
(in millions, except par values) | June 30, 2023 | December 31, 2022 | |||||||||
Assets | |||||||||||
Current assets: | |||||||||||
Cash and cash equivalents | $ | $ | |||||||||
Short-term investments | |||||||||||
Trade accounts receivable, net | |||||||||||
Other current assets | |||||||||||
Total current assets | |||||||||||
Property and equipment, net | |||||||||||
Operating lease assets, net | |||||||||||
Goodwill | |||||||||||
Intangible assets, net | |||||||||||
Deferred income tax assets, net | |||||||||||
Long-term investments | |||||||||||
Other noncurrent assets | |||||||||||
Total assets | $ | $ | |||||||||
Liabilities and Stockholders’ Equity | |||||||||||
Current liabilities: | |||||||||||
Accounts payable | $ | $ | |||||||||
Deferred revenue | |||||||||||
Short-term debt | |||||||||||
Operating lease liabilities | |||||||||||
Accrued expenses and other current liabilities | |||||||||||
Total current liabilities | |||||||||||
Deferred revenue, noncurrent | |||||||||||
Operating lease liabilities, noncurrent | |||||||||||
Deferred income tax liabilities, net | |||||||||||
Long-term debt | |||||||||||
Long-term income taxes payable | |||||||||||
Other noncurrent liabilities | |||||||||||
Total liabilities | |||||||||||
Stockholders’ equity: | |||||||||||
Preferred stock, $ | |||||||||||
Class A common stock, $ | |||||||||||
Additional paid-in capital | |||||||||||
Retained earnings | |||||||||||
Accumulated other comprehensive income (loss) | ( | ( | |||||||||
Total stockholders’ equity | |||||||||||
Total liabilities and stockholders’ equity | $ | $ |
Cognizant Technology Solutions | 4 | June 30, 2023 Form 10-Q |
(in millions, except per share data) | Three Months Ended June 30, | Six Months Ended June 30, | |||||||||||||||||||||
2023 | 2022 | 2023 | 2022 | ||||||||||||||||||||
Revenues | $ | $ | $ | $ | |||||||||||||||||||
Operating expenses: | |||||||||||||||||||||||
Cost of revenues (exclusive of depreciation and amortization expense shown separately below) | |||||||||||||||||||||||
Selling, general and administrative expenses | |||||||||||||||||||||||
Restructuring charges | |||||||||||||||||||||||
Depreciation and amortization expense | |||||||||||||||||||||||
Income from operations | |||||||||||||||||||||||
Other income (expense), net: | |||||||||||||||||||||||
Interest income | |||||||||||||||||||||||
Interest expense | ( | ( | ( | ( | |||||||||||||||||||
Foreign currency exchange gains (losses), net | ( | ( | ( | ||||||||||||||||||||
Other, net | ( | ( | |||||||||||||||||||||
Total other income (expense), net | |||||||||||||||||||||||
Income before provision for income taxes | |||||||||||||||||||||||
Provision for income taxes | ( | ( | ( | ( | |||||||||||||||||||
Income (loss) from equity method investments | |||||||||||||||||||||||
Net income | $ | $ | $ | $ | |||||||||||||||||||
Basic earnings per share | $ | $ | $ | $ | |||||||||||||||||||
Diluted earnings per share | $ | $ | $ | $ | |||||||||||||||||||
Weighted average number of common shares outstanding - Basic | |||||||||||||||||||||||
Dilutive effect of shares issuable under stock-based compensation plans | |||||||||||||||||||||||
Weighted average number of common shares outstanding - Diluted |
Cognizant Technology Solutions | 5 | June 30, 2023 Form 10-Q |
(in millions) | Three Months Ended June 30, | Six Months Ended June 30, | |||||||||||||||||||||
2023 | 2022 | 2023 | 2022 | ||||||||||||||||||||
Net income | $ | $ | $ | $ | |||||||||||||||||||
Change in Accumulated other comprehensive income (loss), net of tax: | |||||||||||||||||||||||
Foreign currency translation adjustments | ( | ( | |||||||||||||||||||||
Unrealized gains and losses on cash flow hedges | ( | ( | |||||||||||||||||||||
Other comprehensive income (loss) | ( | ( | |||||||||||||||||||||
Comprehensive income | $ | $ | $ | $ |
Cognizant Technology Solutions | 6 | June 30, 2023 Form 10-Q |
(in millions) | Class A Common Stock | Additional Paid-in Capital | Retained Earnings | Accumulated Other Comprehensive Income (Loss) | Total | |||||||||||||||||||||||||||||||||
Shares | Amount | |||||||||||||||||||||||||||||||||||||
Balance, December 31, 2022 | $ | $ | $ | $ | ( | $ | ||||||||||||||||||||||||||||||||
Net income | — | — | — | — | ||||||||||||||||||||||||||||||||||
Other comprehensive income (loss) | — | — | — | — | ||||||||||||||||||||||||||||||||||
Common stock issued, stock-based compensation plans | — | — | — | |||||||||||||||||||||||||||||||||||
Stock-based compensation expense | — | — | — | — | ||||||||||||||||||||||||||||||||||
Repurchases of common stock | ( | — | ( | ( | — | ( | ||||||||||||||||||||||||||||||||
Dividends declared, $ | — | — | — | ( | — | ( | ||||||||||||||||||||||||||||||||
Balance, March 31, 2023 | ( | |||||||||||||||||||||||||||||||||||||
Net income | — | — | — | — | ||||||||||||||||||||||||||||||||||
Other comprehensive income (loss) | — | — | — | — | ||||||||||||||||||||||||||||||||||
Common stock issued, stock-based compensation plans | — | — | — | |||||||||||||||||||||||||||||||||||
Stock-based compensation expense | — | — | — | — | ||||||||||||||||||||||||||||||||||
Repurchases of common stock | ( | — | ( | ( | — | ( | ||||||||||||||||||||||||||||||||
Dividends declared, $ | — | — | — | ( | — | ( | ||||||||||||||||||||||||||||||||
Balance, June 30, 2023 | $ | $ | $ | $ | ( | $ | ||||||||||||||||||||||||||||||||
(in millions) | Class A Common Stock | Additional Paid-in Capital | Retained Earnings | Accumulated Other Comprehensive Income (Loss) | Total | |||||||||||||||||||||||||||||||||
Shares | Amount | |||||||||||||||||||||||||||||||||||||
Balance, December 31, 2021 | $ | $ | $ | $ | $ | |||||||||||||||||||||||||||||||||
Net income | — | — | — | — | ||||||||||||||||||||||||||||||||||
Other comprehensive income (loss) | — | — | — | — | ( | ( | ||||||||||||||||||||||||||||||||
Common stock issued, stock-based compensation plans | — | — | — | |||||||||||||||||||||||||||||||||||
Stock-based compensation expense | — | — | — | — | ||||||||||||||||||||||||||||||||||
Repurchases of common stock | ( | — | ( | ( | — | ( | ||||||||||||||||||||||||||||||||
Dividends declared, $ | — | — | — | ( | — | ( | ||||||||||||||||||||||||||||||||
Balance, March 31, 2022 | ( | |||||||||||||||||||||||||||||||||||||
Net income | — | — | — | — | ||||||||||||||||||||||||||||||||||
Other comprehensive income (loss) | — | — | — | — | ( | ( | ||||||||||||||||||||||||||||||||
Common stock issued, stock-based compensation plans | — | — | — | |||||||||||||||||||||||||||||||||||
Stock-based compensation expense | — | — | — | — | ||||||||||||||||||||||||||||||||||
Repurchases of common stock | ( | — | ( | ( | — | ( | ||||||||||||||||||||||||||||||||
Dividends declared, $ | — | — | — | ( | — | ( | ||||||||||||||||||||||||||||||||
Balance, June 30, 2022 | $ | $ | $ | $ | ( | $ | ||||||||||||||||||||||||||||||||
Cognizant Technology Solutions | 7 | June 30, 2023 Form 10-Q |
(in millions) | For the Six Months Ended June 30, | ||||||||||
2023 | 2022 | ||||||||||
Cash flows from operating activities: | |||||||||||
Net income | $ | $ | |||||||||
Adjustments to reconcile net income to net cash provided by operating activities: | |||||||||||
Depreciation and amortization | |||||||||||
Deferred income taxes | ( | ( | |||||||||
Stock-based compensation expense | |||||||||||
Other | |||||||||||
Changes in assets and liabilities, net of the effect of business combinations: | |||||||||||
Trade accounts receivable, current | ( | ||||||||||
Other current and noncurrent assets | ( | ||||||||||
Accounts payable | ( | ( | |||||||||
Deferred revenues, current and noncurrent | ( | ( | |||||||||
Other current and noncurrent liabilities | ( | ( | |||||||||
Net cash provided by operating activities | |||||||||||
Cash flows from investing activities: | |||||||||||
Purchases of property and equipment | ( | ( | |||||||||
Purchases of available-for-sale investment securities | ( | ||||||||||
Proceeds from maturity or sale of available-for-sale investment securities | |||||||||||
Purchases of held-to-maturity investment securities | ( | ( | |||||||||
Proceeds from maturity of held-to-maturity investment securities | |||||||||||
Purchases of other investments | ( | ( | |||||||||
Proceeds from maturity or sale of other investments | |||||||||||
Proceeds from sales of businesses | |||||||||||
Payments for business combinations, net of cash acquired | ( | ||||||||||
Net cash (used in) provided by investing activities | ( | ||||||||||
Cash flows from financing activities: | |||||||||||
Issuance of common stock under stock-based compensation plans | |||||||||||
Repurchases of common stock | ( | ( | |||||||||
Repayment of Term Loan borrowings and finance lease and earnout obligations | ( | ( | |||||||||
Dividends paid | ( | ( | |||||||||
Net cash (used in) financing activities | ( | ( | |||||||||
Effect of exchange rate changes on cash, cash equivalents and restricted cash | ( | ||||||||||
(Decrease) in cash, cash equivalents and restricted cash | ( | ( | |||||||||
Cash, cash equivalents and restricted cash beginning of year | |||||||||||
Cash and cash equivalents, end of period | $ | $ |
Cognizant Technology Solutions | 8 | June 30, 2023 Form 10-Q |
Note 1 — Interim Consolidated Financial Statements |
Note 2 — Revenues and Trade Accounts Receivable |
Three Months Ended June 30, 2023 | Six Months Ended June 30, 2023 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
(in millions) | FS | HS | P&R | CMT | Total | FS | HS | P&R | CMT | Total | ||||||||||||||||||||||||||||||||||||||||||||||||||||
Revenues | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Geography: | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
North America | $ | $ | $ | $ | $ | $ | $ | $ | $ | $ | ||||||||||||||||||||||||||||||||||||||||||||||||||||
United Kingdom | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Continental Europe | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Europe - Total | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Rest of World | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Total | $ | $ | $ | $ | $ | $ | $ | $ | $ | $ | ||||||||||||||||||||||||||||||||||||||||||||||||||||
Service line: | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Consulting and technology services | $ | $ | $ | $ | $ | $ | $ | $ | $ | $ | ||||||||||||||||||||||||||||||||||||||||||||||||||||
Outsourcing services | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Total | $ | $ | $ | $ | $ | $ | $ | $ | $ | $ | ||||||||||||||||||||||||||||||||||||||||||||||||||||
Type of contract: | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Time and materials | $ | $ | $ | $ | $ | $ | $ | $ | $ | $ | ||||||||||||||||||||||||||||||||||||||||||||||||||||
Fixed-price | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Transaction or volume-based | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Total | $ | $ | $ | $ | $ | $ | $ | $ | $ | $ |
Cognizant Technology Solutions | 9 | June 30, 2023 Form 10-Q |
Three Months Ended June 30, 2022 | Six Months Ended June 30, 2022 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
(in millions) | FS | HS | P&R | CMT | Total | FS | HS | P&R | CMT | Total | ||||||||||||||||||||||||||||||||||||||||||||||||||||
Revenues | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Geography: | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
North America | $ | $ | $ | $ | $ | $ | $ | $ | $ | $ | ||||||||||||||||||||||||||||||||||||||||||||||||||||
United Kingdom | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Continental Europe | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Europe - Total | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Rest of World | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Total | $ | $ | $ | $ | $ | $ | $ | $ | $ | $ | ||||||||||||||||||||||||||||||||||||||||||||||||||||
Service line: | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Consulting and technology services | $ | $ | $ | $ | $ | $ | $ | $ | $ | $ | ||||||||||||||||||||||||||||||||||||||||||||||||||||
Outsourcing services | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Total | $ | $ | $ | $ | $ | $ | $ | $ | $ | $ | ||||||||||||||||||||||||||||||||||||||||||||||||||||
Type of contract: | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Time and materials | $ | $ | $ | $ | $ | $ | $ | $ | $ | $ | ||||||||||||||||||||||||||||||||||||||||||||||||||||
Fixed-price | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Transaction or volume-based | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Total | $ | $ | $ | $ | $ | $ | $ | $ | $ | $ | ||||||||||||||||||||||||||||||||||||||||||||||||||||
(in millions) | 2023 | 2022 | ||||||||||||
Beginning balance | $ | $ | ||||||||||||
Costs capitalized | ||||||||||||||
Amortization expense | ( | ( | ||||||||||||
Ending balance | $ | $ |
(in millions) | 2023 | 2022 | ||||||||||||
Beginning balance | $ | $ | ||||||||||||
Revenues recognized during the period but not billed | ||||||||||||||
Amounts reclassified to trade accounts receivable | ( | ( | ||||||||||||
Amounts acquired in business combinations | ||||||||||||||
Effect of foreign currency exchange movements | ( | |||||||||||||
Ending balance | $ | $ |
Cognizant Technology Solutions | 10 | June 30, 2023 Form 10-Q |
(in millions) | 2023 | 2022 | ||||||||||||
Beginning balance | $ | $ | ||||||||||||
Amounts billed but not recognized as revenues | ||||||||||||||
Revenues recognized related to the beginning balance of deferred revenue | ( | ( | ||||||||||||
Amounts acquired in business combinations | ||||||||||||||
Effect of foreign currency exchange movements | ( | |||||||||||||
Ending balance | $ | $ |
(in millions) | 2023 | 2022 | ||||||||||||
Beginning balance | $ | $ | ||||||||||||
Credit loss expense (1) | ||||||||||||||
Write-offs charged against the allowance | ( | ( | ||||||||||||
Ending balance | $ | $ |
Note 3 — Business Combinations |
Cognizant Technology Solutions | 11 | June 30, 2023 Form 10-Q |
(in millions) | OneSource Virtual | Mobica | Total | Weighted Average Useful Life | |||||||||||||||||||
Cash | $ | $ | $ | ||||||||||||||||||||
Trade accounts receivable | |||||||||||||||||||||||
Other current assets | |||||||||||||||||||||||
Property and equipment and other assets | |||||||||||||||||||||||
Non-deductible goodwill | |||||||||||||||||||||||
Tax-deductible goodwill | |||||||||||||||||||||||
Customer relationship assets | |||||||||||||||||||||||
Current liabilities | ( | ( | ( | ||||||||||||||||||||
Noncurrent liabilities | ( | ( | ( | ||||||||||||||||||||
Purchase price | $ | $ | $ |
Note 4 — Restructuring Charges |
(in millions) | Three and Six Months Ended June 30, 2023 | ||||
Employee separation costs | $ | ||||
Facility exit costs (1) | |||||
Third party and other costs (2) | |||||
Total restructuring charges | $ |
Cognizant Technology Solutions | 12 | June 30, 2023 Form 10-Q |
(in millions) | 2023 | |||||||
Beginning balance | $ | |||||||
Employee separation costs accrued | ||||||||
Payments made | ( | |||||||
Ending balance | $ |
Note 5 — Investments |
(in millions) | June 30, 2023 | December 31, 2022 | |||||||||
Short-term investments: | |||||||||||
Equity investment security | $ | $ | |||||||||
Available-for-sale investment securities | |||||||||||
Held-to-maturity investment securities | |||||||||||
Time deposits | |||||||||||
Total short-term investments | $ | $ |
Long-term investments: | |||||||||||
Other investments | $ | $ | |||||||||
Restricted time deposits(1) | |||||||||||
Total long-term investments | $ | $ |
Cognizant Technology Solutions | 13 | June 30, 2023 Form 10-Q |
Note 6 — Accrued Expenses and Other Current Liabilities |
(in millions) | June 30, 2023 | December 31, 2022 | |||||||||
Compensation and benefits | $ | $ | |||||||||
Customer volume and other incentives | |||||||||||
Income taxes | |||||||||||
Professional fees | |||||||||||
Other | |||||||||||
Total accrued expenses and other current liabilities | $ | $ |
Note 7 — Debt |
Cognizant Technology Solutions | 14 | June 30, 2023 Form 10-Q |
(in millions) | June 30, 2023 | December 31, 2022 | |||||||||
Term Loan | $ | $ | |||||||||
Less: | |||||||||||
Current maturities | ( | ( | |||||||||
Unamortized deferred financing costs | ( | ( | |||||||||
Long-term debt, net of current maturities | $ | $ |
Note 8 — Income Taxes |
Three Months Ended June 30, | Six Months Ended June 30, | ||||||||||||||||||||||
2023 | 2022 | 2023 | 2022 | ||||||||||||||||||||
Effective income tax rate | % | % | % | % |
Cognizant Technology Solutions | 15 | June 30, 2023 Form 10-Q |
Note 9 — Derivative Financial Instruments |
(in millions) | June 30, 2023 | December 31, 2022 | ||||||||||||||||||||||||||||||
Designation of Derivatives | Location on Statement of Financial Position | Assets | Liabilities | Assets | Liabilities | |||||||||||||||||||||||||||
Foreign exchange forward and option contracts – Designated as cash flow hedging instruments | Other current assets | $ | $ | — | $ | $ | — | |||||||||||||||||||||||||
Other noncurrent assets | — | — | ||||||||||||||||||||||||||||||
Accrued expenses and other current liabilities | — | — | ||||||||||||||||||||||||||||||
Other noncurrent liabilities | — | — | ||||||||||||||||||||||||||||||
Total | ||||||||||||||||||||||||||||||||
Foreign exchange forward contracts – Not designated as hedging instruments | Other current assets | — | — | |||||||||||||||||||||||||||||
Accrued expenses and other current liabilities | — | — | ||||||||||||||||||||||||||||||
Total | ||||||||||||||||||||||||||||||||
Total | $ | $ | $ | $ |
Cognizant Technology Solutions | 16 | June 30, 2023 Form 10-Q |
(in millions) | June 30, 2023 | December 31, 2022 | |||||||||
2023 | $ | $ | |||||||||
2024 | |||||||||||
2025 | |||||||||||
Total notional value of contracts outstanding (1) | $ | $ | |||||||||
(in millions) | Change in Derivative Gains and Losses Recognized in Accumulated Other Comprehensive Income (Loss) (effective portion) | Location of Net (Losses) and Gains Reclassified from Accumulated Other Comprehensive Income (Loss) into Income (effective portion) | Net (Losses) and Gains Reclassified from Accumulated Other Comprehensive Income (Loss) into Income (effective portion) | ||||||||||||||||||||||||||
2023 | 2022 | 2023 | 2022 | ||||||||||||||||||||||||||
Foreign exchange forward and option contracts – Designated as cash flow hedging instruments | $ | $ | ( | Cost of revenues | $ | ( | $ | ||||||||||||||||||||||
SG&A expenses | ( | ||||||||||||||||||||||||||||
Total | $ | ( | $ |
(in millions) | Change in Derivative Gains and Losses Recognized in Accumulated Other Comprehensive Income (Loss) (effective portion) | Location of Net (Losses) Gains Reclassified from Accumulated Other Comprehensive Income (Loss) into Income (effective portion) | Net (Losses) Gains Reclassified from Accumulated Other Comprehensive Income (Loss) into Income (effective portion) | ||||||||||||||||||||||||||
2023 | 2022 | 2023 | 2022 | ||||||||||||||||||||||||||
Foreign exchange forward and option contracts – Designated as cash flow hedging instruments | $ | $ | ( | Cost of revenues | $ | ( | $ | ||||||||||||||||||||||
SG&A expenses | ( | ||||||||||||||||||||||||||||
Total | $ | ( | $ |
(in millions) | June 30, 2023 | December 31, 2022 | |||||||||||||||||||||
Notional | Fair Value | Notional | Fair Value | ||||||||||||||||||||
Contracts outstanding | $ | $ | $ | $ | ( |
Cognizant Technology Solutions | 17 | June 30, 2023 Form 10-Q |
Location of Net (Losses) Gains on Derivative Instruments | Amount of Net (Losses) Gains on Derivative Instruments | ||||||||||||||||||||||||||||
Three Months Ended June 30, | Six Months Ended June 30, | ||||||||||||||||||||||||||||
(in millions) | 2023 | 2022 | 2023 | 2022 | |||||||||||||||||||||||||
Foreign exchange forward contracts – Not designated as hedging instruments | $ | ( | $ | $ | ( | $ |
Note 10 — Fair Value Measurements |
(in millions) | Level 1 | Level 2 | Level 3 | Total | |||||||||||||||||||
Cash equivalents: | |||||||||||||||||||||||
Money market funds | $ | $ | — | $ | — | $ | |||||||||||||||||
Time deposits | — | — | |||||||||||||||||||||
Short-term investments: | |||||||||||||||||||||||
Time deposits | |||||||||||||||||||||||
Equity investment security | |||||||||||||||||||||||
Other current assets: | |||||||||||||||||||||||
Foreign exchange forward contracts | |||||||||||||||||||||||
Long-term investments: | |||||||||||||||||||||||
Restricted time deposits(1) | — | — | |||||||||||||||||||||
Other noncurrent assets | |||||||||||||||||||||||
Foreign exchange forward contracts | |||||||||||||||||||||||
Accrued expenses and other current liabilities: | |||||||||||||||||||||||
Foreign exchange forward contracts | ( | ( | |||||||||||||||||||||
Contingent consideration liabilities | ( | ( | |||||||||||||||||||||
Cognizant Technology Solutions | 18 | June 30, 2023 Form 10-Q |
(in millions) | Level 1 | Level 2 | Level 3 | Total | |||||||||||||||||||
Cash equivalents: | |||||||||||||||||||||||
Money market funds | $ | $ | — | $ | — | $ | |||||||||||||||||
Time deposits | — | — | |||||||||||||||||||||
Commercial paper | — | — | |||||||||||||||||||||
Short-term investments: | |||||||||||||||||||||||
Time deposits | |||||||||||||||||||||||
Equity investment security | |||||||||||||||||||||||
Available-for-sale investment securities: | |||||||||||||||||||||||
Certificates of deposit and commercial paper | |||||||||||||||||||||||
Other current assets: | |||||||||||||||||||||||
Foreign exchange forward contracts | |||||||||||||||||||||||
Long-term investments: | |||||||||||||||||||||||
Restricted time deposits(1) | — | — | |||||||||||||||||||||
Other noncurrent assets: | |||||||||||||||||||||||
Foreign exchange forward contracts | |||||||||||||||||||||||
Accrued expenses and other current liabilities: | |||||||||||||||||||||||
Foreign exchange forward contracts | ( | ( | |||||||||||||||||||||
Contingent consideration liabilities | ( | ( | |||||||||||||||||||||
Other noncurrent liabilities: | |||||||||||||||||||||||
Foreign exchange forward contracts | ( | ( | |||||||||||||||||||||
Contingent consideration liabilities | ( | ( |
(in millions) | June 30, 2023 | June 30, 2022 | ||||||||||||
Beginning balance | $ | $ | ||||||||||||
Initial measurement recognized at acquisition | ||||||||||||||
Change in fair value recognized in SG&A expenses | ||||||||||||||
Payments | ( | ( | ||||||||||||
Ending balance | $ | $ |
Cognizant Technology Solutions | 19 | June 30, 2023 Form 10-Q |
Note 11 — Accumulated Other Comprehensive Income (Loss) |
Three Months | Six Months | |||||||||||||||||||||||||||||||||||||
(in millions) | Before Tax Amount | Tax Effect | Net of Tax Amount | Before Tax Amount | Tax Effect | Net of Tax Amount | ||||||||||||||||||||||||||||||||
Foreign currency translation adjustments: | ||||||||||||||||||||||||||||||||||||||
Beginning balance | $ | ( | $ | $ | ( | $ | ( | $ | $ | ( | ||||||||||||||||||||||||||||
Change in foreign currency translation adjustments | ( | ( | ||||||||||||||||||||||||||||||||||||
Ending balance | $ | ( | $ | $ | ( | $ | ( | $ | $ | ( | ||||||||||||||||||||||||||||
Unrealized gains and losses on cash flow hedges: | ||||||||||||||||||||||||||||||||||||||
Beginning balance | $ | ( | $ | $ | ( | $ | ( | $ | $ | ( | ||||||||||||||||||||||||||||
Unrealized gains arising during the period | ( | ( | ||||||||||||||||||||||||||||||||||||
Reclassifications of net losses to: | ||||||||||||||||||||||||||||||||||||||
Cost of revenues | ( | |||||||||||||||||||||||||||||||||||||
SG&A expenses | ( | ( | ||||||||||||||||||||||||||||||||||||
Net change | ( | ( | ||||||||||||||||||||||||||||||||||||
Ending balance | $ | $ | ( | $ | $ | $ | ( | $ | ||||||||||||||||||||||||||||||
Accumulated other comprehensive income (loss): | ||||||||||||||||||||||||||||||||||||||
Beginning balance | $ | ( | $ | $ | ( | $ | ( | $ | $ | ( | ||||||||||||||||||||||||||||
Other comprehensive income (loss) | ( | ( | ||||||||||||||||||||||||||||||||||||
Ending balance | $ | ( | $ | $ | ( | $ | ( | $ | $ | ( |
Three Months | Six Months | |||||||||||||||||||||||||||||||||||||
(in millions) | Before Tax Amount | Tax Effect | Net of Tax Amount | Before Tax Amount | Tax Effect | Net of Tax Amount | ||||||||||||||||||||||||||||||||
Foreign currency translation adjustments: | ||||||||||||||||||||||||||||||||||||||
Beginning balance | $ | ( | $ | $ | ( | $ | ( | $ | $ | ( | ||||||||||||||||||||||||||||
Change in foreign currency translation adjustments | ( | ( | ( | ( | ||||||||||||||||||||||||||||||||||
Ending balance | $ | ( | $ | $ | ( | $ | ( | $ | $ | ( | ||||||||||||||||||||||||||||
Unrealized gains and losses on cash flow hedges: | ||||||||||||||||||||||||||||||||||||||
Beginning balance | $ | $ | ( | $ | $ | $ | ( | $ | ||||||||||||||||||||||||||||||
Unrealized (losses) arising during the period | ( | ( | ( | ( | ||||||||||||||||||||||||||||||||||
Reclassifications of net (gains) to: | ||||||||||||||||||||||||||||||||||||||
Cost of revenues | ( | ( | ( | ( | ||||||||||||||||||||||||||||||||||
SG&A expenses | ( | ( | ( | ( | ||||||||||||||||||||||||||||||||||
Net change | ( | ( | ( | ( | ||||||||||||||||||||||||||||||||||
Ending balance | $ | ( | $ | $ | ( | $ | ( | $ | $ | ( | ||||||||||||||||||||||||||||
Accumulated other comprehensive income (loss): | ||||||||||||||||||||||||||||||||||||||
Beginning balance | $ | ( | $ | ( | $ | ( | $ | $ | ( | $ | ||||||||||||||||||||||||||||
Other comprehensive income (loss) | ( | ( | ( | ( | ||||||||||||||||||||||||||||||||||
Ending balance | $ | ( | $ | $ | ( | $ | ( | $ | $ | ( |
Cognizant Technology Solutions | 20 | June 30, 2023 Form 10-Q |
Note 12— Commitments and Contingencies |
Cognizant Technology Solutions | 21 | June 30, 2023 Form 10-Q |
Cognizant Technology Solutions | 22 | June 30, 2023 Form 10-Q |
Note 13 — Segment Information |
Three Months Ended June 30, | Six Months Ended June 30, | ||||||||||||||||||||||
(in millions) | 2023 | 2022 | 2023 | 2022 | |||||||||||||||||||
Financial Services | $ | $ | $ | $ | |||||||||||||||||||
Health Sciences | |||||||||||||||||||||||
Products and Resources | |||||||||||||||||||||||
Communications, Media and Technology | |||||||||||||||||||||||
Total segment operating profit | |||||||||||||||||||||||
Less: unallocated costs | |||||||||||||||||||||||
Income from operations | $ | $ | $ | $ |
Cognizant Technology Solutions | 23 | June 30, 2023 Form 10-Q |
As of | |||||||||||
(in millions) | June 30, 2023 | December 31, 2022 | |||||||||
Long-lived Assets: (1) | |||||||||||
North America(2) | $ | $ | |||||||||
Europe | |||||||||||
Rest of World (3) | |||||||||||
Total | $ | $ |
Note 14 — Subsequent Events |
Cognizant Technology Solutions | 24 | June 30, 2023 Form 10-Q |
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations. |
Executive Summary |
Revenue |
Income from Operations |
Operating Margin |
Diluted EPS |
GAAP | Adjusted1 |
GAAP | Adjusted1 |
GAAP | Adjusted1 |
Revenue down $20 million or 0.4% from Q2 2022; a decline of 0.1% in constant currency1 | Income from Operations down $183 million or 24.1% from Q2 2022 Adjusted Income from Operations1 down $66 million or 8.7% from Q2 2022 | Operating margin down 370 bps from Q2 2022 Adjusted Operating Margin1 down 130 bps from Q2 2022 | Diluted EPS down $0.20 or 18.0% from Q2 2022 Adjusted Diluted EPS1 down $0.04 or 3.5% from Q2 2022 | |||||||||||||||||||||||
Cognizant Technology Solutions | 25 | June 30, 2023 Form 10-Q |
Cognizant Technology Solutions | 26 | June 30, 2023 Form 10-Q |
Results of Operations |
% of | % of | Increase / Decrease | |||||||||||||||||||||||||||||||||
(Dollars in millions, except per share data) | 2023 | Revenues | 2022 | Revenues | $ | % | |||||||||||||||||||||||||||||
Revenues | $ | 4,886 | 100.0 | $ | 4,906 | 100.0 | $ | (20) | (0.4) | ||||||||||||||||||||||||||
Cost of revenues(a) | 3,231 | 66.1 | 3,119 | 63.6 | 112 | 3.6 | |||||||||||||||||||||||||||||
Selling, general and administrative expenses(a) | 830 | 17.0 | 883 | 18.0 | (53) | (6.0) | |||||||||||||||||||||||||||||
Restructuring charges | 117 | 2.4 | — | — | 117 | NA | |||||||||||||||||||||||||||||
Depreciation and amortization expense | 131 | 2.7 | 144 | 2.9 | (13) | (9.0) | |||||||||||||||||||||||||||||
Income from operations | 577 | 11.8 | 760 | 15.5 | (183) | (24.1) | |||||||||||||||||||||||||||||
Other income (expense), net | 10 | 1 | 9 | * | |||||||||||||||||||||||||||||||
Income before provision for income taxes | 587 | 12.0 | 761 | 15.5 | (174) | (22.9) | |||||||||||||||||||||||||||||
Provision for income taxes | (124) | (184) | 60 | (32.6) | |||||||||||||||||||||||||||||||
Net income | $ | 463 | 9.5 | $ | 577 | 11.8 | $ | (114) | (19.8) | ||||||||||||||||||||||||||
Diluted earnings per share | $ | 0.91 | $ | 1.11 | $ | (0.20) | (18.0) | ||||||||||||||||||||||||||||
Other Financial Information3 | |||||||||||||||||||||||||||||||||||
Adjusted Income from Operations and Adjusted Operating Margin | $ | 694 | 14.2 | $ | 760 | 15.5 | $ | (66) | (8.7) | ||||||||||||||||||||||||||
Adjusted Diluted EPS | $ | 1.10 | $ | 1.14 | $ | (0.04) | (3.5) |
Revenues |
Cognizant Technology Solutions | 27 | June 30, 2023 Form 10-Q |
Revenues - Reportable Business Segments and Geographic Markets |
Q2 2023 as compared to Q2 2022 | Increase / (Decrease) | ||||||||||||||||||||||
(Dollars in millions) | $ | % | CC %4 | ||||||||||||||||||||
Financial Services | $ | (79) | (5.1) | (4.8) | |||||||||||||||||||
Health Sciences | 32 | 2.3 | 2.1 | ||||||||||||||||||||
Products and Resources | 37 | 3.2 | 3.7 | ||||||||||||||||||||
CMT | (10) | (1.2) | (0.4) | ||||||||||||||||||||
Total revenues | $ | (20) | (0.4) | (0.1) |
Q2 2023 as compared to Q2 2022 | Increase / (Decrease) | ||||||||||||||||||||||
(Dollars in millions) | $ | % | CC %4 | ||||||||||||||||||||
North America | $ | (67) | (1.8) | (1.7) | |||||||||||||||||||
United Kingdom | 15 | 3.3 | 3.3 | ||||||||||||||||||||
Continental Europe | 49 | 11.0 | 9.5 | ||||||||||||||||||||
Europe - Total | 64 | 7.1 | 6.3 | ||||||||||||||||||||
Rest of World | (17) | (4.9) | — | ||||||||||||||||||||
Total revenues | $ | (20) | (0.4) | (0.1) |
Cognizant Technology Solutions | 28 | June 30, 2023 Form 10-Q |
Cost of Revenues (Exclusive of Depreciation and Amortization Expense) |
é | $112M | ||||||||||
é | 2.5% as a % of revenues | ||||||||||
¡ | % of Revenues | ||||||||||
SG&A Expenses (Exclusive of Depreciation and Amortization Expense) |
ê | $53M | ||||||||||
ê | 1.0% as a % of revenues | ||||||||||
¡ | % of Revenues | ||||||||||
Restructuring Charges |
Depreciation and Amortization Expense |
Operating Margin and Adjusted Operating Margin5 - Overall |
Cognizant Technology Solutions | 29 | June 30, 2023 Form 10-Q |
Segment Operating Profit |
Segment operating profit | % | Segment operating margin |
(Dollars in millions) | 2023 | % of Revenues | 2022 | % of Revenues | Increase | ||||||||||||||||||||||||
Total segment operating profit | $ | 1,012 | 20.7 | $ | 1,082 | 22.1 | $ | (70) | |||||||||||||||||||||
Less: unallocated costs | 435 | 8.9 | 322 | 6.6 | 113 | ||||||||||||||||||||||||
Income from operations | $ | 577 | 11.8 | $ | 760 | 15.5 | $ | (183) | |||||||||||||||||||||
Cognizant Technology Solutions | 30 | June 30, 2023 Form 10-Q |
Other Income (Expense), Net |
(in millions) | 2023 | 2022 | Increase/ Decrease | ||||||||||||||
Foreign currency exchange gains (losses) | $ | 5 | $ | (36) | $ | 41 | |||||||||||
(Losses) gains on foreign exchange forward contracts not designated as hedging instruments | (14) | 32 | (46) | ||||||||||||||
Foreign currency exchange gains (losses), net | (9) | (4) | (5) | ||||||||||||||
Interest income | 30 | 9 | 21 | ||||||||||||||
Interest expense | (10) | (3) | (7) | ||||||||||||||
Other, net | (1) | (1) | — | ||||||||||||||
Total other income (expense), net | $ | 10 | $ | 1 | $ | 9 |
Provision for Income Taxes |
ê | $60M | ||||||||||
¡ Effective Income Tax Rate ê 3.1% | |||||||||||
Net Income |
ê | $114M | |||||||
¡ ê 2.3% of Revenues | ||||||||
Cognizant Technology Solutions | 31 | June 30, 2023 Form 10-Q |
2023 | % of Revenues | 2022 | % of Revenues | ||||||||||||||||||||
GAAP income from operations and operating margin | $ | 577 | 11.8 | $ | 760 | 15.5 | |||||||||||||||||
NextGen charges(1) | 117 | 2.4 | — | — | |||||||||||||||||||
Adjusted Income from Operations and Adjusted Operating Margin | $ | 694 | 14.2 | $ | 760 | 15.5 | |||||||||||||||||
GAAP diluted EPS | $ | 0.91 | $ | 1.11 | |||||||||||||||||||
Effect of NextGen charges, pre-tax | 0.23 | — | |||||||||||||||||||||
Non-operating foreign currency exchange (gains) losses, pre-tax (2) | 0.02 | 0.01 | |||||||||||||||||||||
Tax effect of above adjustments(3) | (0.06) | 0.02 | |||||||||||||||||||||
Adjusted Diluted EPS | $ | 1.10 | $ | 1.14 | |||||||||||||||||||
Three Months Ended June 30, | |||||||||||
(in millions) | 2023 | 2022 | |||||||||
Non-GAAP income tax benefit (expense) related to: | |||||||||||
NextGen charges | 31 | — | |||||||||
Foreign currency exchange gains and losses | — | (14) |
Cognizant Technology Solutions | 32 | June 30, 2023 Form 10-Q |
% of | % of | Increase / Decrease | ||||||||||||||||||||||||||||||
(Dollars in millions, except per share data) | 2023 | Revenues | 2022 | Revenues | $ | % | ||||||||||||||||||||||||||
Revenues | $ | 9,698 | 100.0 | $ | 9,732 | 100.0 | $ | (34) | (0.3) | |||||||||||||||||||||||
Cost of revenues(a) | 6,374 | 65.7 | 6,216 | 63.9 | 158 | 2.5 | ||||||||||||||||||||||||||
Selling, general and administrative expenses(a) | 1,665 | 17.2 | 1,745 | 17.9 | (80) | (4.6) | ||||||||||||||||||||||||||
Restructuring charges | 117 | 1.2 | — | — | 117 | NA | ||||||||||||||||||||||||||
Depreciation and amortization expense | 263 | 2.7 | 287 | 2.9 | (24) | (8.4) | ||||||||||||||||||||||||||
Income from operations | 1,279 | 13.2 | 1,484 | 15.2 | (205) | (13.8) | ||||||||||||||||||||||||||
Other income (expense), net | 46 | 6 | 40 | * | ||||||||||||||||||||||||||||
Income before provision for income taxes | 1,325 | 13.7 | 1,490 | 15.3 | (165) | (11.1) | ||||||||||||||||||||||||||
Provision for income taxes | (282) | (354) | 72 | (20.3) | ||||||||||||||||||||||||||||
Income (loss) from equity method investments | — | 4 | (4) | (100.0) | ||||||||||||||||||||||||||||
Net income | $ | 1,043 | 10.8 | $ | 1,140 | 11.7 | $ | (97) | (8.5) | |||||||||||||||||||||||
Diluted EPS | $ | 2.05 | $ | 2.18 | $ | (0.13) | (6.0) | |||||||||||||||||||||||||
Other Financial Information6 | ||||||||||||||||||||||||||||||||
Adjusted Income From Operations and Adjusted Operating Margin | $ | 1,396 | 14.4 | $ | 1,484 | 15.2 | $ | (88) | (5.9) | |||||||||||||||||||||||
Adjusted Diluted EPS | $ | 2.21 | $ | 2.23 | $ | (0.02) | (0.9) |
Revenues |
Cognizant Technology Solutions | 33 | June 30, 2023 Form 10-Q |
Revenues - Reportable Business Segments and Geographic Markets |
YTD 2023 as compared to YTD 2022 | Increase / (Decrease) | |||||||||||||||||||
(Dollars in millions) | $ | % | CC %7 | |||||||||||||||||
Financial Services | $ | (131) | (4.3) | (3.1) | ||||||||||||||||
Health Sciences | 73 | 2.6 | 2.8 | |||||||||||||||||
Products and Resources | 25 | 1.1 | 2.5 | |||||||||||||||||
CMT | (1) | (0.1) | 1.7 | |||||||||||||||||
Total revenues | $ | (34) | (0.3) | 0.7 |
YTD 2023 as compared to YTD 2022 | Increase / (Decrease) | |||||||||||||||||||
(Dollars in millions) | $ | % | CC %7 | |||||||||||||||||
North America | $ | (91) | (1.3) | (1.1) | ||||||||||||||||
United Kingdom | 40 | 4.4 | 8.8 | |||||||||||||||||
Continental Europe | 51 | 5.6 | 7.3 | |||||||||||||||||
Europe - Total | 91 | 5.0 | 8.0 | |||||||||||||||||
Rest of World | (34) | (4.9) | 0.5 | |||||||||||||||||
Total revenues | $ | (34) | (0.3) | 0.7 |
Cognizant Technology Solutions | 34 | June 30, 2023 Form 10-Q |
Cost of Revenues (Exclusive of Depreciation and Amortization Expense) |
é | $158M | ||||||||||
é | 1.8% as a % of revenues | ||||||||||
¡ | % of Revenues | ||||||||||
SG&A Expenses (Exclusive of Depreciation and Amortization Expense) |
ê | $80M | ||||||||||
ê | 0.7% as a % of revenues | ||||||||||
¡ | % of Revenues | ||||||||||
Restructuring Charges |
Depreciation and Amortization Expense |
Operating Margin and Adjusted Operating Margin8- Overall |
Cognizant Technology Solutions | 35 | June 30, 2023 Form 10-Q |
Segment Operating Profit |
(Dollars in millions) | 2023 | % of Revenues | 2022 | % of Revenues | Increase | ||||||||||||||||||||||||
Total segment operating profit | $ | 2,018 | 20.8 | $ | 2,129 | 21.9 | $ | (111) | |||||||||||||||||||||
Less: unallocated costs | 739 | 7.6 | 645 | 6.7 | 94 | ||||||||||||||||||||||||
Income from operations | $ | 1,279 | 13.2 | $ | 1,484 | 15.2 | $ | (205) | |||||||||||||||||||||
Other Income (Expense), Net |
(in millions) | 2023 | 2022 | Increase/ Decrease | ||||||||||||||
Foreign currency exchange gains (losses) | $ | 27 | $ | (49) | $ | 76 | |||||||||||
(Losses) gains on foreign exchange forward contracts not designated as hedging instruments | (24) | 45 | (69) | ||||||||||||||
Foreign currency exchange gains (losses), net | 3 | (4) | 7 | ||||||||||||||
Interest income | 60 | 15 | 45 | ||||||||||||||
Interest expense | (19) | (5) | (14) | ||||||||||||||
Other, net | 2 | — | 2 | ||||||||||||||
Total other income (expense), net | $ | 46 | $ | 6 | $ | 40 |
Cognizant Technology Solutions | 36 | June 30, 2023 Form 10-Q |
Provision for Income Taxes |
ê | $72M | ||||||||||
¡ Effective Income Tax Rate ê 2.5% | |||||||||||
Net Income |
ê | $97M | |||||||
¡ ê 0.9% of Revenues | ||||||||
(Dollars in millions, except per share amounts) | 2023 | % of Revenues | 2022 | % of Revenues | |||||||||||||||||||
GAAP income from operations and operating margin | $ | 1,279 | 13.2 | $ | 1,484 | 15.2 | |||||||||||||||||
NextGen charges (1) | 117 | 1.2 | — | — | |||||||||||||||||||
Adjusted Income from Operations and Adjusted Operating Margin | $ | 1,396 | 14.4 | $ | 1,484 | 15.2 | |||||||||||||||||
GAAP diluted EPS | $ | 2.05 | $ | 2.18 | |||||||||||||||||||
Effect of NextGen charges, pre-tax | 0.23 | — | |||||||||||||||||||||
Non-operating foreign currency exchange (gains) losses, pre-tax (2) | (0.01) | 0.01 | |||||||||||||||||||||
Tax effect of above adjustments (3) | (0.06) | 0.04 | |||||||||||||||||||||
Adjusted Diluted EPS | $ | 2.21 | $ | 2.23 | |||||||||||||||||||
(in millions) | Six Months Ended June 30, | ||||||||||
2023 | 2022 | ||||||||||
Non-GAAP income tax benefit (expense) related to: | |||||||||||
NextGen charges | 31 | — | |||||||||
Foreign currency exchange gains and losses | 5 | (20) |
Cognizant Technology Solutions | 37 | June 30, 2023 Form 10-Q |
Liquidity and Capital Resources |
(in millions) | 2023 | 2022 | Increase / Decrease | |||||||||||||||||
Net cash provided by (used in): | ||||||||||||||||||||
Operating activities | $ | 765 | $ | 834 | $ | (69) | ||||||||||||||
Investing activities | (300) | 229 | (529) | |||||||||||||||||
Financing activities | (704) | (1,050) | 346 | |||||||||||||||||
Cognizant Technology Solutions | 38 | June 30, 2023 Form 10-Q |
Acquisitions | |||||
Share Repurchases | |||||
Dividend payments | |||||
Commitments and Contingencies |
Critical Accounting Estimates |
Recently Adopted and New Accounting Pronouncements |
Item 3. Quantitative and Qualitative Disclosures about Market Risk. |
Cognizant Technology Solutions | 39 | June 30, 2023 Form 10-Q |
Item 4. Controls and Procedures. |
Cognizant Technology Solutions | 40 | June 30, 2023 Form 10-Q |
Item 1. Legal Proceedings |
Item 1A. Risk Factors |
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds |
Month | Total Number of Shares Purchased | Average Price Paid per Share | Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs | Approximate Dollar Value of Shares that May Yet Be Purchased under the Plans or Programs (in millions) | ||||||||||||||||||||||
April 1, 2023 - April 30, 2023 | — | $ | — | — | $ | 2,575 | ||||||||||||||||||||
May 1, 2023 - May 31, 2023 | 1,600,726 | 62.47 | 1,600,726 | 2,475 | ||||||||||||||||||||||
June 1, 2023 - June 30, 2023 | 1,581,790 | 63.22 | 1,581,790 | 2,375 | ||||||||||||||||||||||
Total | 3,182,516 | $ | 62.84 | 3,182,516 |
Cognizant Technology Solutions | 41 | June 30, 2023 Form 10-Q |
Item 5. Other Information |
Cognizant Technology Solutions | 42 | June 30, 2023 Form 10-Q |
Item 6. Exhibit Index |
Incorporated by Reference | ||||||||||||||||||||||||||||||||||||||
Number | Exhibit Description | Form | File No. | Exhibit | Date | Filed or Furnished Herewith | ||||||||||||||||||||||||||||||||
3.1 | 8-K | 000-24429 | 3.1 | 6/7/2018 | ||||||||||||||||||||||||||||||||||
3.2 | 8-K | 000-24429 | 3.1 | 9/20/2018 | ||||||||||||||||||||||||||||||||||
10.1 | S-8 | 333-272444 | 99.1 | 6/6/2023 | ||||||||||||||||||||||||||||||||||
10.2 | S-8 | 333-272444 | 99.2 | 6/6/2023 | ||||||||||||||||||||||||||||||||||
10.3 | Filed | |||||||||||||||||||||||||||||||||||||
10.4 | Filed | |||||||||||||||||||||||||||||||||||||
10.5 | Filed | |||||||||||||||||||||||||||||||||||||
10.6 | Filed | |||||||||||||||||||||||||||||||||||||
10.7 | Filed | |||||||||||||||||||||||||||||||||||||
10.8 | Filed | |||||||||||||||||||||||||||||||||||||
10.9 | Filed | |||||||||||||||||||||||||||||||||||||
31.1 | Filed | |||||||||||||||||||||||||||||||||||||
31.2 | Filed | |||||||||||||||||||||||||||||||||||||
32.1 | Furnished | |||||||||||||||||||||||||||||||||||||
32.2 | Furnished | |||||||||||||||||||||||||||||||||||||
101.INS | Inline XBRL Instance Document - the instance document does not appear in the Interactive Data File because its XBRL tags are embedded within the Inline XBRL document. | Filed | ||||||||||||||||||||||||||||||||||||
101.SCH | Inline XBRL Taxonomy Extension Schema Document | Filed |
Cognizant Technology Solutions | 43 | June 30, 2023 Form 10-Q |
Incorporated by Reference | ||||||||||||||||||||||||||||||||||||||
Number | Exhibit Description | Form | File No. | Exhibit | Date | Filed or Furnished Herewith | ||||||||||||||||||||||||||||||||
101.CAL | Inline XBRL Taxonomy Extension Calculation Linkbase Document | Filed | ||||||||||||||||||||||||||||||||||||
101.DEF | Inline XBRL Taxonomy Extension Definition Linkbase Document | Filed | ||||||||||||||||||||||||||||||||||||
101.LAB | Inline XBRL Taxonomy Extension Label Linkbase Document | Filed | ||||||||||||||||||||||||||||||||||||
101.PRE | Inline XBRL Taxonomy Extension Presentation Linkbase Document | Filed | ||||||||||||||||||||||||||||||||||||
104 | Cover Page Interactive Data File (formatted as Inline XBRL and contained in Exhibit 101) | Filed |
Cognizant Technology Solutions | 44 | June 30, 2023 Form 10-Q |
Cognizant Technology Solutions Corporation | ||||||||||||||||||||
Date: | August 3, 2023 | By: | /s/ RAVI KUMAR S | |||||||||||||||||
Ravi Kumar S, | ||||||||||||||||||||
Chief Executive Officer | ||||||||||||||||||||
(Principal Executive Officer) |
Date: | August 3, 2023 | By: | /s/ JAN SIEGMUND | |||||||||||||||||
Jan Siegmund, | ||||||||||||||||||||
Chief Financial Officer | ||||||||||||||||||||
(Principal Financial Officer) |
Cognizant Technology Solutions | 45 | June 30, 2023 Form 10-Q |
Participant: | |||||
Grant Date: | |||||
Number of RSUs: | |||||
Type of Shares Issuable: | |||||
Vesting Schedule: |
By: | |||||
Print Name: | |||||
Title: |
Participant: | |||||
Grant Date: | |||||
Target Number of PSUs: | |||||
Type of Shares Issuable: | |||||
Vesting Schedule: | |||||
Performance Period: | |||||
Defined Terms | |||||
Performance Milestones | |||||
Performance-Vesting Procedures: |
By: | |||||
Print Name: | |||||
Title: |
Participant: | |||||
Grant Date: | |||||
Number of RSUs: | |||||
Type of Shares Issuable: | |||||
Vesting Schedule: |
Participant: | |||||
Grant Date: | |||||
Number of RSUs: | |||||
Type of Shares Issuable: | |||||
Vesting Schedule: | |||||
Settlement Schedule: |
Participant: | |||||
Grant Date: | |||||
Number of DSUs: | |||||
Type of Shares Issuable: | |||||
Vesting Schedule: | |||||
Settlement Schedule: |
By: | /s/ Jan Siegmund | ||||
Name: | Jan Siegmund | ||||
Title: | Chief Financial Officer |
By: | /s/ Jan Siegmund | ||||
Name: | Jan Siegmund | ||||
Title: | Chief Financial Officer |
Annual Cash Retainer for service on the Board: | $100,000* | |||||||
Additional Annual Cash Retainer for serving as Chair of the Board: | $150,000* | |||||||
Additional Annual Cash Retainer for serving as Member or Chair of a committee of the Board: | Committee Member | Committee Chair** | ||||||
Audit Committee | $20,000* | $35,000* | ||||||
Compensation and Human Capital Committee | $15,000* | $25,000* | ||||||
Finance and Strategy Committee | $15,000* | $20,000* | ||||||
Governance and Sustainability Committee | $10,000* | $20,000* | ||||||
Stock Elections (in lieu of Cash Retainers): | Directors may elect to have all or a portion of the Annual Cash Retainers and Additional Annual Cash Retainers (together, “Cash Retainers”) to which they become entitled paid in fully vested Class A Common Stock (“Common Stock”) in lieu of cash. Any election to receive Cash Retainers in shares must be made on or prior to the date of the Annual Meeting of Shareholders (“Annual Meeting”) immediately preceding the director year (i.e., the period from one Annual Meeting to the next Annual Meeting) with respect to which such Cash Retainers will be paid; provided, however, that a director that is newly elected to the Board (whether or not at an Annual Meeting) shall be entitled for a period of thirty (30) days following such director’s initial election to the Board to make a Stock Election for such director’s initial director year or partial director year of service, as applicable (each such deadline, as applicable, a “Due Date”). If a director is subject to tax withholding as a non-U.S. person with regards to Cash Retainers, a Stock Election will apply only with respect to the portion of the Cash Retainers to which the director is entitled after such tax withholding. The Stock Election made with respect to a director year shall be irrevocable after the applicable Due Date with respect to such director year. The number of shares of Common Stock granted will be determined by dividing the amount of the applicable Cash Retainer by the closing price of the Common Stock on the later of (i) the date the director becomes entitled to the Cash Retainer or (ii) the Due Date (in each case rounded down to nearest whole share). Notwithstanding the foregoing, a director may not make a Stock Election during a Company trading blackout period or when the director is otherwise in possession of material non-public information (in any event, a “Closed Window”). |
Annual RSU Award: | Board Member | Board Chair** | ||||||
$220,000* | $270,000* | |||||||
Annual restricted stock unit (“RSU”) awards are granted as of, or as soon as practicable following, the date of the Annual Meeting or the date a new director joins the Board. The number of RSUs granted will be determined by dividing the amount set out above by the closing price of the Common Stock on the date of the Annual Meeting or the date a new director joins the Board, as applicable (rounded down to nearest whole share). 100% of the RSUs vest on the 1st anniversary of the grant date of the award. | ||||||||
Retirement: | Upon a director’s retirement while in good standing, the Board’s intent is to accelerate the vesting of such director’s outstanding equity awards, and may do so in its discretion. | |||||||
Payment Deferral Elections | Cash Retainers, Annual RSU awards and Common Stock received in lieu of Cash Retainers may be eligible for payment deferral elections in accordance with applicable tax laws and, for Annual RSU Awards and Common Stock received in lieu of Cash Retainers (which shall be granted as “Deferred Stock Units”), the Cognizant Technology Solutions Corporation 2023 Incentive Award Plan or any successor plan (the “2023 Plan”). Such deferred Annual RSUs and Deferred Stock Units shall accrue Dividend Equivalents (as defined in the 2023 Plan) from the date of grant through settlement of such award. | |||||||
Compensation Limits | All amounts received by any non-employee director under these guidelines shall be subject to the limitation contained in Section 4.6(b) of the 2023 Plan. | |||||||
* Indicates that this compensation element will be paid on a pro rata basis for new members of the Board of Directors or a committee or a new Chair of the Board or a committee in the initial year of service, calculated based on the length of service during the twelve-month period following the Company’s most recent Annual Meeting. In addition, each of the indicated cash retainers is paid in advance on an annual basis following the Annual Meeting (or if not elected at an Annual Meeting, within 30 days after election to the Board of Directors), provided, that payments may be delayed in the discretion of the Board (but in no event beyond the end of the calendar year in which they would otherwise be payable) to accommodate Stock Elections delayed by a Closed Window. | ||||||||
** Committee chairs and the Board chair receive the chair retainer/award and not the member retainer/award. |
Dated: | August 3, 2023 | /s/ Ravi Kumar S | ||||||||||||
Ravi Kumar S, | ||||||||||||||
Chief Executive Officer (Principal Executive Officer) |
Dated: | August 3, 2023 | /s/ Jan Siegmund | ||||||||||||
Jan Siegmund, | ||||||||||||||
Chief Financial Officer (Principal Financial Officer) |
Dated: | August 3, 2023 | /s/ Ravi Kumar S | ||||||||||||
Ravi Kumar S, | ||||||||||||||
Chief Executive Officer (Principal Executive Officer) |
Dated: | August 3, 2023 | /s/ Jan Siegmund | ||||||||||||
Jan Siegmund, | ||||||||||||||
Chief Financial Officer (Principal Financial Officer) |
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